BCD Travel will begin levying a three per cent surcharge on certain airfares with an Australia point of sale next week, highlighting airlines’ “reduced remuneration to TMCs” as the reason for doing so.
Although it did not explicitly name Qantas in a statement provided to BTN Europe, it is understood the surcharge, starting from 6 March, will only be applied to bookings with the Australian airline.
It follows in the footsteps of American Express Global Business Travel which implemented a similar three per cent surcharge on Qantas bookings processed in Australia on 20 February.
“During the past 18 months, some airlines in Australia have reduced remuneration to TMCs,” said Rose Stratford, executive vice president, global supplier relations and strategic sourcing at BCD Travel. “BCD did not immediately increase its fee structure to offset the decline; instead, we lobbied these airlines to restore their support. Regrettably, some airlines have declined to reverse their decision and we’re no longer able to absorb the financial shortfall.”
She continued: “We’re committed to running a sustainable business so that we can continue to service and support our clients and travellers long into the future. As a result, for tickets with point-of-sale Australia, we’ll add a three per cent airfare surcharge calculated on the airfare (excluding taxes) from March 6, 2023.”
Stratford said the surcharge will not apply to all airlines, adding: “Airlines that have maintained proportionate levels of support will be exempt from the airfare surcharge.”
Meanwhile, CWT told BTN Europe it has “no plans at present” to introduce a similar surcharge, while FCM, part of the Australian Flight Centre Travel Group, said: “As always, with the industry continuing to evolve post-pandemic, we will give consideration to all possible constructive changes.”
According to BTN Europe sister publication The Beat, Australia-based Corporate Travel Management introduced a two per cent surcharge on Qantas’ international fares booked in Australia last year.
Qantas cut the commission it pays to travel agencies on its international fares ticketed in Australia from five per cent to one per cent last July, noting it was the first time it had adjusted it for more than 15 years and was part of its three-year Covid recovery plan. Other airlines, including Emirates, American Airlines, Cathay Pacific and Singapore Airlines, subsequently made similar moves last year, according to The Beat.
The airline also announced last summer the withdrawal of some lower-priced fares from GDS-based channels from the end of November as it accelerated its NDC strategy. It prompted Amex GBT to urge its clients to contact the airline and ask them not to do so.
In a statement shared with BTN Europe, Amex GBT said its three per cent surcharge is “not related to the introduction of NDC content” but because of “changes to the Qantas economic partnership model”.
“In recent times Qantas, Australia’s largest airline, has spoken publicly about changes to its economic partnership model with travel management companies. These changes result in Qantas shifting the cost to service its bookings to TMCs like Amex GBT,” said the company.
“Amex GBT is required by Qantas to provide, and incurs significant cost in providing, services to manage Qantas bookings. Qantas is now forcing us to shift those costs to customers by no longer reimbursing those costs.”
One concerned travel manager told BTN Europe: “Suppliers are forcing change but it can’t be at the expense of the buyer or traveller paying more. The bottom of the supply chain consuming the content is having to pay more – on top of generally increasing rates. TMCs say they’re not at fault; airlines say they’re not either. They point the finger at each other but it ends up costing the corporate because the cost lands on us.”
Virginia Fitzpatrick, regional director Australia at Partnership Travel Consulting, addressed the surcharge in a recent LinkedIn post: “Unless the agency retained this right through the contract agreement to pass on these variations, then why should you the customer pay for changes to an industry that has happily retained them and in some cases not declared these additional benefits?”
In an article published by BTN Europe this week, Martin Warner, principal at MW Travel Consultancy and former executive vice president, market strategy and segmentation at CWT, suggested the surcharges are a development that could see some corporates rethink how they book and manage travel. “Three per cent on a business class fare from Sydney to Santiago, for example, is a lot of money and that’s in addition to a booking fee,” he said.
“Buyers are now paying more to continue using the TMC. Is there a tipping point where the customer says, 'do I value the services of the TMC sufficiently to pay the extra that I'm now being asked to pay?'”
He concluded: “I'm surprised that we've not seen more corporates [in Australia] talk about either assessing that value or deciding that they want to construct the programme going forward in a different manner. I’d be surprised if there’s not a number of companies looking at breaking it all down and just consuming certain services or content from TMCs. Are we looking at some sort of revolution now?”